Message #21 From:
NewsBot Date: April 2, 2007 05:30:00 AM
FCL News Foundation Coal Addresses Possible Strike
LINTHICUM HEIGHTS, Md.--(BUSINESS WIRE)--Foundation Coal Holdings, Inc. (NYSE:FCL) today provided additional information regarding a potential work stoppage sanctioned by the United Mine Workers of America (UMWA) at three Foundation operating affiliates: Cumberland Coal Resources, LP (Cumberland), Emerald Coal Resources, LP (Emerald), and Wabash Mine Holding Company (Wabash). Each of these distinct entities has its own collective bargaining agreement with the UMWA, and each has been conducting collective bargaining through designated agents since January 2007. The UMWA has authorized a work stoppage at the operations of all three entities at 12:01 a.m., Wednesday April 4, 2007. Wabash, Emerald and Cumberland each believe the work stoppage is unwarranted and will impose unnecessary burdens on the affected employees, their families, their customers and the local communities.
In December 2006 the UMWA announced it had completed the negotiation with the Bituminous Coal Operators Association for a new five year collective bargaining agreement (National Agreement). This agreement replaced the 2002 National Agreement, which for most companies expired on December 31, 2006. For historical reasons, Wabash’s labor agreement did not expire until 11:59 p.m. on March 31, 2007 and the contracts for Emerald and Cumberland each expired 24 hours later. The 2007 National Agreement was ratified with an unprecedented 80 percent vote in December 2006. The National Agreement provides for a 20 percent wage increase over the 5 year term, a $1,000 signing bonus paid immediately, increased pension benefits, increased pension plan contributions, and it preserves full health care benefits for active and retired employees.
After the December 2006 vote which ratified the National Agreement, the UMWA stated in a press release that “Never before has a contract been ratified by such a wide margin.” It went on to add, “This agreement is going to be the industry-wide agreement, as far as the UMWA is concerned. That’s our message, to the other companies. It is a fair agreement for our members, and we believe it is fair for the companies as well.” Various other entities whose contracts expired on January 1, 2007 have signed the National Agreement with the UMWA long after that expiration date. After several of those agreements were reached, the UMWA has publicly reiterated that the National Agreement was the contract to be signed and that “it’s also a fair agreement… for every other coal company…”
Well before their 2002 contracts were set to expire, the two Pennsylvania based affiliates bargaining with the UMWA—Cumberland and Emerald—each confirmed that the National Agreement was indeed the agreement signed by its competitors, and that there were no side agreements that might put Cumberland and Emerald at a competitive disadvantage. With this confirmation, they separately in writing notified the UMWA in February 2007, almost six weeks before their 2002 national agreements were set to expire, that they were willing to sign the 2007 National Agreement.
As reconfirmed in bargaining sessions over the last few days, Cumberland and Emerald remain ready to sign the National Agreement, which would keep nearly 1,000 workers in Pennsylvania on the job. They remain optimistic the UMWA will sign the contract it has endorsed as the “industry-wide agreement” that would allow so many of their members to work uninterrupted under the very favorable terms of the new agreement.
Through no fault of its employees, Wabash is in a different situation. As a result of many factors such as geology, aged infrastructure, the need to convey materials and coal more than 10 miles underground, and regionally soft market conditions, Wabash has not been profitable or competitive. The Wabash Mine, which lost more than $26 million in calendar year 2006, faces ongoing losses in 2007 and requires both significant capital investment and operational cost reductions to have an opportunity to return to profitability. Its outlook is clouded further by current weak market conditions, existing lower cost competitors, and the entrance of new, lower cost competitors in the region who are likely to have a competitive market advantage.
This cost structure at Wabash is not a new issue. During the last round of contract negotiations in 2002, Cumberland and Emerald signed separate contracts that were in line with the 2002 National Bituminous Coal Wage Agreement. However, Wabash did not sign the 2002 National Bituminous Coal Wage Agreement. Rather, in an effort to remain competitive, it conducted separate negotiations on wages, health care matters and other items. The Wabash contract was ultimately voted on and signed in 2003, reflecting the different economic and operational realities of this mine. Because of these different operational realities, Wabash is not in a position to operate under the 2007 National Agreement. As such, during collective bargaining Wabash has provided to the UMWA economic models of its projected performance in light of anticipated factors and costs. In negotiations Wabash continues to explain and clarify this information and to gather additional information requested by the UMWA. Its bargaining agents also have made proposals of the types of contract concessions which would be needed so as to possibly justify the huge capital infusion that could potentially make the Wabash mine competitive.
The UMWA has publicly stated that it will strike all three mines unless Wabash also signs the 2007 National Agreement. It has also publicly maintained that Wabash, based in Illinois, is part of a “single employer” with the Emerald and Cumberland mines based in Pennsylvania. This is absolutely not the case and these three operations have separately negotiated and executed their own collective bargaining agreements for more than three decades. They do not share equipment, employees, customers, day-to-day management, or any of the other factors used to establish a ‘single employer’ status with Wabash.
Peter Vietti, a spokesman noted, “A strike is an unfavorable outcome for everyone, particularly the employees, their families, and the communities in which they live. We truly hope the UMWA reconsiders its position, signs the 2007 National Agreement contracts with Cumberland and Emerald it initially demanded be signed, and allows their employees to continue to work while good faith discussions continue with respect to the Wabash mine.”
Foundation Coal Holdings, Inc., through its affiliates is a major U.S. coal producer with 14 coal mines and related facilities in Pennsylvania, West Virginia, Illinois, and Wyoming. Through its subsidiaries Foundation Coal employs approximately 3,150 people and produces approximately 72 million tons annually, largely for utilities generating electricity. Foundation’s corporate offices are in Linthicum Heights, MD.
